The financial crisis that began in 2007 revealed how fragile our financial system is.
And it unfolded fast. For months on end we seemed to wake up to one blow-up or bankruptcy after another. Then one morning the Secretary of the Treasury appeared before Congress -- and described a possible "financial Armageddon." Yes, that was a couple of years ago, but as of August 20, 2010 the list of bank failures for this year numbered 118.
Those holding high office have tried practically everything to rescue America's economy.
Did any of the big "stimulus packages" work? Well, if they did, why would a former U.S. Labor Secretary call for another? Robert Reich did just that in a USA Today opinion piece on Sept. 3:
"Businesses won't create more jobs until consumers start spending again. But American households — who make up 70% of the economy — can't and won't spend because they're still trying to get out from under a huge load of debt....
"There's only one sure way to fill that gap and turn the vicious cycle into a virtuous one. Government has to further stoke the economy to make up for the lack of private-sector demand.
"...bigger deficits are necessary in the short term."
If government hasn't "fixed" the economy by now, do you think they'll figure it out anytime soon?
Well, President Obama acknowledged in a September 10 press conference that what he called a "recovery" has been "painfully slow."
Moreover, two of the administration's top economic policymakers have recently resigned: Peter Orszag (Director of the Office of Management and Budget), and Christina Romer (Chair of the Council of Economic Advisers).
So if the hoped for "economic recovery" has yet to happen, how about the stock market?
Is a new and powerful bull trend about to unfold?
Well, our Elliott wave analysis reveals a clear answer to that question. Sure, the market is up from the March 2009 low, but there are compelling reasons why the Dow Industrials have not surpassed the April high (11,258).
"The DJIA’s worst August in nine years (-4.3%) should signal [that]...the last vestiges of extreme optimism produced by the Great Bull Market will be wrung out and a dramatic... alteration of the social order will pick up speed."
Elliott Wave Financial Forecast (Sept. 2010)